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When you’ve got a low credit score, it can often feel like getting a loan is impossible. What’s worse, having a low credit score can often put you off even the idea of applying for a loan in the first place.
However, there’s good news.
Not only is it possible to be accepted for a loan with low credit, it’s actually getting easier and easier every day.
Yes, you might still find it difficult to walk into a high-street bank and leave with a loan, but that doesn’t mean you can’t borrow money on terms that suit you and your needs. You just need to be a bit clever about it and to find a lender that’s a good fit for your needs.
Things to know before you apply for a loan with a low credit score
1. Your credit score
Sounds obvious, right? However, many people assume that they have a low credit score when, in fact, their credit score is fair or good. And, on the other end of the scale, some people assume that they’ve got a good credit score because they’ve never borrowed money or missed a payment but – because of their lack of credit history – have a poor credit rating.
Before you start thinking about applying for a loan, it’s important to make sure you know your credit score. Some loans are tailored for people with poor credit, others for those with good credit – applying for the wrong one can actually damage your credit score.
(If you’re not sure how to find out your credit score – we’ve got you covered. Check out our handy credit score guide.)
2. How much you’re looking to borrow – and for how long
This is also important – if you’re looking to borrow smaller amounts, then you’ll probably find it much easier to find somebody willing to lend you money. In essence, you’ve minimised the risk the lender is taking by lending you money.
However, if you’re looking to borrow larger amounts of money, you might have to search around for a company willing to lend larger amounts of money or consider using a guarantor (more on that later).
3. The little things that are causing your low credit score
Did you know that little things like not being on the electoral register can affect your credit score? If you’re not yet registered to vote at your current address, make sure that you get that taken care of (you can do at the GOV.UK website).
For a list of other things that can help fix your low credit score – check out our post from a few weeks ago.
4. Consider applying for a guarantor loan
If you’ve got a low credit score, then it might be a good idea to consider applying for a guarantor loan.
In recent years, guarantor loans have become a popular way for those with poor credit scores to borrow larger amounts of money – it allows family members to vouch for your ability to pay
the repayments (and agree to pay them if you can’t), giving you access to higher amounts of money with better repayment plans.
If you’ve had difficulties in the past, or have no repayment history, guarantor loans can be a great way to borrow the amount you need to finally buy that car you’ve had your eye on, do some work on the house or go on the holiday you’ve been putting off.
5. Find a lender that suits your needs
While it’s obviously incredibly important to find a lender that’s willing to lend you money – it’s also very important to find a lender that is tailored to people with bad credit. Not only do they have a wider choice of lending options available for people in your position, but they’re specialists at helping people like you to borrow money.
Another great thing about these lenders is the fact that they offer a service that lets you check whether you’re eligible to borrow money, how much you could borrow and on what repayment plan – all without leaving a dent on your credit report.
At Bamboo, we specialise in helping people with bad credit on the road to financial recovery. We have a range of loan options available for people with bad credit, from a unsecured personal loans to guarantor loans. To see how much you could borrow, why not try our Loan Calculator? It’s free, quick and doesn’t leave a mark on your credit file. Plus, if you’re accepted, the money could be in your account within 24 hours. (Representative 49.7% APR. A guarantor may be required).
- Author Jack Barclay
- Posted 6 March 2017